Josh Arnold (78:44)
Well, we'll get to the shoes. But the R word recession, recession, recession. Take a look at the yield curve on the Treasuries. We've got inversion. So the shorter end of this curve is slightly higher than the longer end of the curve. The Treasury Secretary is and the Commerce Chief are now focused on the movement of the ten year treasury on the belief that as the ten year treasury, which does have an impact on mortgage rate rates, as the ten year treasury is coming down, they're going to be cheering that because they look at that as a positive. Well, of course if it makes it easier for people to buy houses, that is a positive overall for the economy. But another way to look at the 10 year treasury coming down in yield, meaning that treasury prices are going up. And especially with the stock market and particularly technology stocks in a correction down at least 10% from their recent highs, market participants are worried first of another big drawdown or potential bear market which is down 20% from highs. Oh, I could point out a number of, of individual names that are down 20% or more from their highs. Oh, I can think of one. Right away Tesla's down 30% from its highs or almost 30% in the last month. That is a definitely a bear market in Tesla. If I were to look at some of the other auto manufacturers, they're definitely in correction territory. Again, it's worries about the impact of the tariffs on their businesses. Now I do know that today and last night there have been postponements of the additional 25% tariff for the auto companies and now any other company that is in compliance with the USMCA. But the April 2 date for reciprocal tariffs is still out there and that does give market participants a lot of nervousness and that is sending us some jitters through the marketplace. Me, I think a lot of this information is priced in to a lot of stocks. Now I do recognize that as the market goes down that fear levels or fear gauges start increasing because nobody wants to lose either hard earned gains or of the belief that positions are going to go to zero. Now, just a reminder, in 2018 when there was a lot of tariff talk and imposition of tariffs, there was tremendous, tremendous volatility in the market. I have stated this repeatedly over the last several months. Do be prepared this year, one, for a lot of volatility and two, returns such as we had in 2023 and 2024 may be a lot more difficult to come by. Another issue that is affecting the market is we'll say, the unwinding of the artificial intelligence trade and when I say unwinding had a lot of potential built into a lot of stocks. Money flowed in very quickly and the result results aren't there yet. It's going to take time for that to play out. But a lot of the companies around artificial intelligence have produced very good numbers but their stocks had run up so high that those numbers and the guidance wasn't sufficient for many investors to hold on the stocks and they sold off. And any negative comments from CEOs does scare off investors. I am of the belief still am of the belief that artificial intelligence is Internet 3.0 and it is a useful tool for many many companies and many businesses and it will produce results over time and I still think the best places to be for that. And again I am talking my talking my book do understand that are still Apple and Amazon right now. Several Chinese companies have gotten not going to say a leg up but they have they have been getting some money a little faster than Apple and Amazon are right now. Back to the shoes. Every one of the shoe companies or at least the shoe companies that I follow are going to be subject to tariffs. Does not matter whether it's Nike or Deckers or Adidas or on Shoes or Brooks, they all are going to be subject to tariffs and quite frankly have been subject to tariffs for a lot of years. These companies have been able to navigate through tariffs in the past and I do believe they'll continue to be able to navigate through going forward. Nike probably has the best potential for a turnaround but with its new management that that is going to take at least a year until you start seeing total new products coming in from Nike. In the meantime, think Nike's change in marketing going back to their wholesalers and focusing in on performance should start to win win some awards. Deckers has been knocked down because HOKA may not be as popular as on shoes on O N and on Just reported some very very good numbers. We'll call it a beat and raise quarter. The Adidas also posted some good numbers as they finally got rid of their Yazzie shoes. Brooks is still a leader we'll say in the running category. They are part of however Berkshire Hathaway which is probably a very safe place we'll say to hide out in the current market environment given all the cash that they have sitting on hand not to mention stock positions in Coca Cola which generates to them a huge dividend payout for the number of shares they have. And they're large owners also of of Apple, not to mention owning the Burlington Northern Railway and several insurance companies. Those are probably more subject to what's going on in the economy, but shoes still a place to look at and given their ability to navigate the past tariffs, I don't think that's going to go away. No doubt prepare for more volatile and.
